Airbus threatens to cancel A400M

Airbus has threatened to cancel its troubled military transport plane unless
the European countries buying it agree to renegotiate the contract which is
costing the plane maker millions of euros a day.

"We've asked governments to take their share of the A400M programme burden," a company spokesman said. "Skilled and scarce engineering resources are bound up in the programme. If these losses continue they can be deployed more efficiently on our civil aviation programmes."

A decision is expected by the end of January, but Airbus said on Tuesday it wants a resolution "as soon as possible." Talks have already been going on for nine months.

Airbus is understood to want the German government to agree to more concessions.

Tom Enders, chief executive, wants the seven buyer nations, which includes Britain, France and Germany, to pay more for the planes they have ordered, or reduce their order but pay the same amount of money. Parent company EADS has said the A400M programme is burning through €100m (£90m) a month.

Scrapping the project would cost EADS at least the €5.7bn of advance payments it would have to repay to the governments. It has already put aside €2.4bn in provisions against losses related to the plane.

The A400M finally made its maiden flight last month, but the transport plane is more than three years behind schedule. The programme has suffered problems with its engine, which was built by a consortium of European companies including Rolls-Royce, instead of US manufacturer Pratt & Whitney, at the behest of the governments involved.

The original contract, signed in 2003, imposes large financial penalties on EADS for over-running. The European defence company wants to renegotiate the A400M contract so that the partner countries take on more of the risk for delays, because of the political nature of decisions linked to the plane.

The Ministry of Defence confirmed Britain is still negotiating its position.

"The UK remains committed to A400M, but not at any cost," a spokesman said. "We regard the ongoing negotiations as the best means by which to determine a more deliverable programme."

The UK has ordered 25 A400Ms to replace its ageing fleet of transporters for use in Afghanistan.

South Africa recently pulled an order for eight A400Ms, leaving Malaysia the only export customer.